Articles
New York Times: Bush and Congress Seen Pushing for Stimulus Plan
01/12/2008
By Steven R. Weisman and David M. Herszenhorn
WASHINGTON — The Bush administration and Congressional
leaders, increasingly concerned about a possible recession, are moving closer
to agreeing that an economic stimulus package is needed soon, Washington
officials said Friday.
A Republican familiar with the administration’s thinking
said Mr. Bush would present ideas to stimulate the economy, most likely in the
form of tax relief, in his State of the Union message on Jan. 28. Mr. Bush will
not decide on the details until he returns from the
Democrats and Republicans on Capitol Hill are also
suggesting that they might be able to put aside longstanding partisan
differences and work on a stimulus measure, lawmakers and aides said Friday.
In a fresh sign of the possibility of an agreement on a
roughly $100 billion package of tax cuts and spending to spur the economy,
Nancy Pelosi of California, the speaker of the House, and Senator Harry Reid of
Nevada, the majority leader, wrote to President Bush on Friday saying, “We want
to work with you.”
On Monday, Mr. Bush acknowledged that Americans were
“anxious about the economy” and said he was studying what actions to take. But
this Republican, speaking anonymously to avoid pre-empting the White House,
said, “If the decision was going to be ‘no,’ he wouldn’t have put that out
there.”
Some Democrats say they could support tax relief focused on
lower-income people and, perhaps, even tax cuts for corporations, if the White
House and the Republican Congressional leadership accept some spending
increases like extended unemployment benefits or aid to states to help them
avert spending cuts.
Responding to Ms. Pelosi and Mr. Reid’s letter, Tony Fratto,
a White House spokesman, said Mr. Bush had instructed aides to get views from
all sides as he decided on a possible economic package.
“We would of course want to proceed in a bipartisan way,”
Mr. Fratto said, adding Mr. Bush planned to meet, perhaps next week, with Ms.
Pelosi and Mr. Reid to report on his
Some lawmakers said that calls from the presidential
campaign trail for limiting partisanship and changing the way
But these Democrats said the White House would have to agree
not to try to attach favorite measures like repealing the estate tax or making
permanent Mr. Bush’s 2001 and 2003 cuts, just as Democrats would have to
refrain from attaching extraneous spending.
“It would make sense for the president to do something in a
bipartisan way,” said Representative Charles B. Rangel, Democrat of
A senior Republican aide said: “Republicans will have to
talk about making the tax cuts permanent and all that kind of stuff. Democrats
are going to want things on their long-term agenda. But if you figure those
cancel each other out, there’s probably a playing field where everyone can
agree.”
Democrats appeared to be further along in their thinking
than the administration, having decided in December to spend the early part of
2008 blaming Mr. Bush for the economic anxieties of the middle class. Until
recently, Republicans in Congress and in the presidential campaigns have said
the economy was healthy.
With the House returning next week, Representative Rahm
Emanuel of
Democrats are also planning a party retreat at the end of
the month where they are scheduled to hear from Ben S. Bernanke, the chairman
of the Federal Reserve, among other economic experts. Ms. Pelosi plans to meet
with Mr. Bernanke on Monday.
Still, some Bush administration officials say any action
should be sooner rather than later. “Time will be of the essence,” Henry M.
Paulson Jr., the treasury secretary, said Friday on Bloomberg Television. “So I
think we want to do something as quickly as possible if we do it.”
The tone changed quickly over the last few weeks, especially
after the level of unemployment grew, oil prices reached $100 a barrel, the
stock market stumbled and the housing crisis worsened. Leading Republican and
Democratic economists soon began voicing fears of a recession, with some even
suggesting one had already begun. New polls show Americans are increasingly
alarmed, and the topic has figured more and more in presidential debates. On
Tuesday,
Mr. Bernanke laid out a bleak picture of the economy on
Thursday and suggested that the Fed would cut interest rates soon. That has
made it more acceptable for lawmakers to discuss the need for actions to avoid
being blamed for failing to respond.
The first presidential candidate, indeed the first leading
Democrat, to offer a package was Senator Hillary Rodham Clinton of
Mrs. Clinton’s package drew on the thinking of leading
Democratic policy makers, many of whom served under President Bill Clinton and
are advising Democratic leaders in Congress.
One of those advisers, Gene B. Sperling, was on Capitol Hill
on Friday for meetings with Democrats. Mr. Sperling worked closely with Ms.
Pelosi on the economic stimulus package that she brokered with Mr. Bush shortly
after she became minority leader.
Leading Democrats said they envisioned a proposal of at least
$100 billion, which economists say is the minimum needed to counter a recession
that many for now say would probably be short.
Many Democrats are reciting what they call the “three T’s”
for the stimulus package, that it should be temporary, timely and targeted to
low- and middle-income Americans. The mantra is intended as a shield against
Republican attacks that Democrats would go on a spending spree, as well as
Republican calls to make Mr. Bush’s tax cuts permanent after they expire in
2010.
Republicans are expected to emphasize tax cuts for
individuals and businesses. Kevin A. Hassett, director of economic policy
studies at the American Enterprise Institute, said tax relief to spur business
investment would be especially useful now.
“These issues aren’t really in dispute,” Mr. Hassett said.
“If you want to do a stimulus package, it should juice up activity this year
and then go away. But it has to have two components, one for individuals and
one for business firms to spur capital investment.”
Mr. Hassett and other Republican economists also warned that
a package that was caught up in grandstanding on both sides might come too late
to do any good. In 1992, for example, after President George Bush invited
Democrats to submit a stimulus package, both sides argued as the recession came
and went.
But many Republicans said there was a risk of their seeming
indifferent to the economic situation, especially to Americans in danger of
losing their homes because of the subprime mortgage crisis, and a risk of
holding a package hostage to their long-term tax-cutting agenda.
Democrats are hardly united, however. Some are likely to
demand spending for public works as part of any package. Others say they are
worried that they will be accused of violating the party’s promise to “pay as
you go” by offsetting any tax cuts or spending increases with savings.
But most Democrats are saying that, at a time of an economic
downturn, they do not need to stick to that promise.
“Once pay-go is set aside, you could really see the discussion take off,” a Democratic Congressional aide said. “You could start to align the House and Senate and then triangulate with the White House on what could be done on a faster track.”